Public Bill Committee

[Mr. David Amess in the Chair]

Charles Hendry: On a point of order, Mr. Amess. The Committee will remember that last week we had a debate on feed-in tariffs. In the course of that debate, the Minister gave a robust defence of why the Government were not looking at feed-in tariffs and said that they would consult on that, among other issues, in the summer. However, it was suggested in the press over the weekend that the Chancellor is planning to announce feed-in tariffs as part of his Budget submission. I wonder whether the Minister has indicated to you, Mr. Amess, any desire to clarify the Government’s position, as it now appears from the press reports that we were inadvertently misled in our discussions last week.

David Amess: I have listened carefully to what the hon. Gentleman has said. The Minister has not indicated that he wishes to make any specific statement, so we shall let the matter rest there. Perhaps the Minister will reflect on what the hon. Gentleman has said.

Clause 41

Duty to submit a funded decommissioning programme

Question proposed [28 February], That the clause, as amended, stand part of the Bill.

Question again proposed.

David Amess: I remind the Committee that with this we are taking the following: New clause 23—Nuclear Decommissioning Authority Funding—
‘(1) Section 22 of the Energy Act 2004 (expenditure and receipts of NDA) is amended as follows.
(2) After subsection (5) insert—
“(6) The Secretary of State may make regulations to include the value of grant payments made by him to the NDA under this section in ‘funded decommissioning programmes’, as defined in section 41 of the Energy Act 2008.”’.

Martin Horwood: The purpose behind the new clause is to address a general issue with clause 41. I am not sure whether we have yet had the stand part debate, so if I am permitted, Mr. Amess, I will make some more general remarks about funded decommissioning programmes.
Some of the subsidies to the nuclear industry are astonishing. Many are not clearly designated at the moment and many are certainly not designated in the Bill. The purpose of the new clause is simply to make an example of the most spectacularly expensive of them all, but the general principle could apply to many others. We have already discussed—I am sure that we will discuss it again—the long-term storage of nuclear waste and whether funded decommissioning programmes will take account of the full cost of not only bringing a truck to the front door of a storage facility, but the long-term maintenance of the facility. If it is to be an accessible storage facility, as Committee on Radioactive Waste Management considers that it might be, it will have to be maintained in some way for a long time.
The Minister has already referred to the gap between funded decommissioning and the capping of any long-term storage facility, and he mentioned in our earlier deliberations that that might happen in the next century—the 22nd century. That would be equivalent to Asquith and Lloyd George making policy for today, as we are talking about very long periods of time. It is difficult to predict the cost of those plans, and I am sure that Asquith and Lloyd George, being good Liberals, would never have taken on such risky liabilities in their day.

Jamie Reed: The hon. Gentleman is making an interesting point about the long-term costs and predictability of waste management, but does he agree that the liabilities produced by our military nuclear programme are not in fact a subsidy to responsible action by responsible Government? Furthermore, does he not believe that the economic and environmental consequences of long-term waste management and the issues involved are much simpler than those relating to carbon capture and storage?

Martin Horwood: I am grateful for the hon. Gentleman’s intervention, and think that we might find common ground on many things during the debates on the clause, as we have a common interest in making the Conservative party honest over this issue. He is an unapologetic supporter of the nuclear industry and I am an unapologetic opponent of it, and neither of us believe in fudging the issue. He is right that long-term storage and the management of that storage involves responsible action by responsible Government—I think that that was the term he used. That is clearly true. We have the waste now, so we clearly have to address the issue. However, I am clear that we should avoid the nuclear industry becoming a special burden on the taxpayer, and we have to be clear on whether that subsidy is being given. We heard evidence from the nuclear installations inspectorate.

Stephen Ladyman: I cannot help pointing out that the hon. Gentleman favours the carbon storage industry being a special liability on the taxpayer. Therefore, as an indirect consequence, the people who produce that carbon in the first place are a special liability on the taxpayer. His attitude seems completely contrary.

Martin Horwood: The hon. Gentleman makes a reasonable point. First, carbon storage is a good thing, while nuclear waste is a bad thing, so I do not pretend to see why we should have a level playing field between the two. Secondly, the Bill does not pretend to meet the cost of carbon capture and storage. It is open, as we have been on both sides of the Chamber, about the need to subsidise carbon capture and storage in order to provide incentives. That is part of saving the planet. The nuclear industry certainly is not.

Stephen Ladyman: Carbon storage may be a good thing; carbon production is not. We do not need carbon storage if we do not produce the carbon in the first place. By proposing a system whereby the state takes the liability in the long term for carbon storage, the hon. Gentleman will be subsidising the production of carbon. The nuclear industry will not produce any carbon.

Martin Horwood: I absolutely deny that allegation. We have already tabled an amendment to try to ensure that no new fossil fuel fired power stations are built without a commitment to bearing the cost of installing carbon capture and storage at a later date. We are applying the same principle to the production of carbon, if not to the storage. The hon. Gentleman is simply wrong. However, we are not on the carbon capture and storage part of the Bill.

Jamie Reed: Will the hon. Gentleman give way?

Martin Horwood: If the intervention is on nuclear power, I will give way.

Jamie Reed: I am exceptionally grateful to the hon. Gentleman for being extremely generous with his time. Does he remember from the evidence session that the Carbon Capture and Storage Association believed that it was unreasonable for the private sector to maintain and carry the costs of long-term carbon capture management—the management of stored carbon. That, as a matter of principle in the association’s opinion, should be a cost held and burdened by the taxpayer.

Martin Horwood: That is broadly true. However, returning to the subject of the clause—the funded decommissioning programmes—there is a second area on which I would like clarification from the Minister. In considering whether there is any intention for the costs to be met by the taxpayer or through the funded decommissioning programmes, what about the nuclear installations inspectorate? That will continue after the active life of a power station and is involved in the safe decommissioning, over a long period, of the nuclear power stations. From my research, it appears slightly difficult to establish exactly what the net cost of the nuclear installations inspectorate is. Perhaps the Minister will confirm that?
I can see that the Health and Safety Executive has an overall budget of £59 million, which includes major hazard outcomes that I understand, in turn, include the nuclear installations inspectorate. The income from nuclear installations is the HSE’s major source of income and yielded £24.2 million, but I am not clear whether there is still a subsidy hidden in there, because the details are not clear. The HSE has a net cost of £35 million a year, so I would be interested to know how much of that is a hidden subsidy to the nuclear industry.
Then we have the Committee on Radioactive Waste Management, which gives vital advice on the long-term decommissioning. The estimated running costs of CoRWM are £2.3 million in 2006-07. There is continuing expenditure for that body as well. Then we have Nirex, the figures for which I do not have to hand. Can the Minister also clarify how much we spend on Nirex and whether there is any intention to recover any of those costs from the funded decommissioning programmes?
We then have the major accident costs, the subject of a statutory instrument only the other week. Discussion of the instrument left us unclear whether there was another long-term subsidy by the taxpayer—for those costs above which the nuclear industry could not get insurance—and whether that long-term liability was yet again being picked up by the taxpayer.
Finally, we have the big daddy of them all, the Nuclear Decommissioning Authority. I was stunned when I realised the scale of the public spending. The NDA’s own action plan says that in 2007-08
“the cost of delivering our remit is expected to be approximately £2.79 billion”,
with a total anticipated income of some £1.37 billion. Within that budget, the cost of running the NDA—the headquarters and administration costs—will amount to no more than £60 million. That leaves an enormous public subsidy of more than £1 billion a year, and I had not realised that that is the largest part of the Minister’s departmental budget. In relation to the settlement that will allow the NDA to increase its budget in a year, a spokesman for the NDA said that
“this is a good settlement”.
I am sure that many local authorities would agree. Many of the programmes that are being cut—for instance, the business resource efficiency and waste programme in recycling and waste production—would agree that that is a good settlement for the nuclear industry.

Malcolm Wicks: Does the hon. Gentleman accept that, as nuclear reactors were built during a period of public ownership, we have a duty now in terms of the nuclear legacy? The Government recognise that duty but is it the position of the Liberal Democrats that we should do nothing about the legacy of nuclear waste?

Martin Horwood: We can categorise that as the Northern Rock defence. It is clear that decommissioning and the work of the Nuclear Decommissioning Authority are important. Since the country has got itself into the situation of having that huge nuclear legacy to clean up—Liberal Democrats would not have got ourselves into that situation—clearly we have to fund it, and it would be unrealistic at this stage in the old nuclear industry’s lifespan to try to retrieve any of the vast public funds spent on it. The question is whether the funded nuclear commissioning programmes expect that mistake to be repeated, or will we take the opportunity to avoid having yet more billions of public money poured into decommissioning costs in the distant future, after the current generation of nuclear power stations is long gone? Will we take the opportunity to give the Minister powers to recover those costs from the nuclear industry? That there should be no subsidy to the nuclear industry is, after all, the principle that the Conservative party certainly has espoused, and it is part of the public debate. That is a crucial matter.

Stephen Ladyman: I am sure that the hon. Gentleman did not mean to mislead the Committee, but he said that the Liberal Democrats would not have got into that position. May I remind him that the Liberal Democrats were in favour of a state-controlled nuclear industry?

Martin Horwood: I am intrigued by that—I will have to check previous manifestos. I have never been in favour of nuclear power and have never been a member of a party that has. I think that the hon. Gentleman might be playing with words on the subject of state control in that, given that one has the industry, it might be a good idea to have it under state control. Liberal Democrat policy is not the subject of the clause and I will not give way further to the hon. Gentleman on that point.
We must conclude that we are talking about a vast part of Government expenditure. The Department for Business, Enterprise and Regulatory Reform’s website has some core statistics about the Department:
“We employ around 2,500 staff, plus 4,000 in our executive agencies. Our annual budget is just over £3 billion. Half of this is spent on nuclear decommissioning; the rest on a range of issues from trade promotion to energy security supply”.
I think that Department for Business, Enterprise and Regulatory Reform is a bit of a mouthful and perhaps the Department ought to be more accurately described as the Department for nuclear subsidy, since that is what it is providing from the largest part of its budget.

Malcolm Wicks: It is a legacy.

Martin Horwood: The Minister says that it is a legacy but the point of new clause 23 in particular is to enable the Minister not to repeat the mistake that has landed us with that legacy from the old nuclear industry. It will not land us with future billions of public subsidy from the new nuclear industry.

Jamie Reed: I am exceedingly grateful for the generosity that the hon. Gentleman has shown. It is important, despite our obvious differences of opinion which have been pointed out, that we deal in the facts in the Committee. The overwhelming majority of the costs that he is taking about, which are the responsibility of the NDA, are due to our military nuclear programme. Does he accept that what we are dealing with is the bill from the cold war?

Martin Horwood: I would like to hear the Minister’s precise take on this: if we can separate the costs between the military programme costs and the costs of civil nuclear power industry, that might be an interesting debate to have.
New clause 23 sets out generously to give the Secretary of State an enabling power to
“make regulations to include the value of grant payments made by him to the NDA under this section in ‘funded decommissioning programmes’, as defined in section 41 of the Energy Act 2008.”
The original section in the Energy Act 2004 made it clear that the proper terminology for the public subsidy of the NDA was in the form of grants. This same principle could be applied to the nuclear installations inspectorate and to any future nuclear liabilities financing assurance board, which, as suggested in the energy White Paper, would look after the funding liabilities of the nuclear industry. It could be applied to Nirex but the NDA is by far and away the most expensive part of this whole exercise.
The reason we are suggesting this new clause is to allow the Minister not to repeat the mistakes of the past, but to recover some of the vast public cost of decommissioning the new generation of nuclear power stations. I hope that he will look kindly on what is an obviously sensible suggestion.

John Robertson: I was not intending to speak on this new clause, but I decided I had to put the record straight. The hon. Gentleman has been, to say the least, selective in what he has been saying in relation to energy in its entirety. His new clause sets out enabling powers, but only in a selective way. I would say that if he were going to put forward new clause, it should have been all encompassing. Anything to do with decommissioning should relate to all types of energy, and not just to the one he particularly dislikes. Therefore, I advise my hon. Friend the Minister that the new clause is not necessary because everything is in the Bill and all the angles are covered.
The hon. Gentleman has on many occasions invoked the California system for energy—a system that relies on its neighbouring states to provide its energy—and that results in that state occasionally getting itself into bother with its lack of energy. People in Nevada are getting very upset that they are supplying California with a lot of energy from its nuclear power stations. They take great exception to California using its clean attitude to say that everything to do with nuclear power is bad and, therefore, implying that its neighbouring state is bad. Again, California has a selective way of looking at things, just as the hon. Gentleman and his party have been so selective.
The hon. Gentleman talked about the nuclear industry and its special burden on the taxpayer, yet all types of energy present some kind of problems to taxpayers. Back in the old days of coal bings, there were problems with mud slides throughout the country. That was a cost to taxpayers, who had to pay money to make sure the bings were safe. If we had known at the time they were going to be as unsafe as they were, we would have done something about it, but, in the case of nuclear, we have learned a great deal.
I invite the hon. Gentleman and his colleagues to the all-party group on nuclear energy, which will have the chairman of CoRWM at its meeting tomorrow morning. The hon. Gentleman should come along and listen and ask questions because, unlike him, we are not blinkered and are quite happy to listen to other people’s ideas.

Martin Horwood: I thank the hon. Gentleman for that generous invitation to breakfast. Will he answer one question if he has more detailed knowledge of CoRWM than I do? Is the latest thinking from CoRWM that any long-term storage facility will have an ongoing accessibility into the next century?

John Robertson: That is a very good question. I suggest that the hon. Gentleman comes along to the meeting and asks it. I hope that he will get the answer that he is looking for. He might not, but he will get an answer and that, in itself, is a step forward.
The hon. Gentleman talked about the capping of nuclear waste. A gentleman described to me that today’s nuclear waste could be tomorrow’s fuel. If that is the case, I stress to the Minister that we should not look at capping nuclear waste, but should store it so that it is retrievable because one day we may be able to use it.
The hon. Gentleman talks about years and years and I think that he is talking about centuries and about the stories about nuclear fuel. Thinking back to where we were 100 years ago in relation to energy, with the best will in the world, I cannot imagine where we will be in 100 years. We may not even need nuclear fuel, but we need it today and we have to look at the problems that we have with energy.
The hon. Gentleman’s argument falls down because he is not willing to look at the big picture. He wants to look at a picture and he is happy as long as the part at the end is not in it. The new clause should not be passed because it is so selective. I recommend that my colleagues do not support it.

Brian Binley: I apologise for my rather throaty vocal approach. On one occasion in the Chamber, I said that I am sometimes on another planet. I have not yet touched down on planet Liberal, but it seems that we are being invited to do so in debating the new clause. I am not attracted to that planet.
I am a committed supporter of the nuclear industry and think that we need to send out a robust message to it so that we can close the gap that the hon. Member for Glasgow, North-West referred to. The problem that we are facing is that the lights may go out; it is not very difficult to conceive of that. Incidentally, in the daytime, our light is provided by a nuclear reactor and I wonder why the Liberals never bring that to the public’s attention. They might think about that fact a little. We call it the sun, but it is a nuclear reactor.
I have a specific question for the Minister, which he might refer to when summing up. As I said, I want to give as robust a message as possible to the industry and to help it as much as possible because we need its help. This is an issue of mutual interest. I must therefore clear up a small matter. Under subsection (8), a person who submits a decommissioning programme will have to pay the fee determined by the Secretary of State for the Ministry to do that work. Will the Minister give us some idea of the size of that fee so that the industry can have a little understanding of the matter? It will not be a massive amount in the great scheme of things, but I think that it will be of interest to the industry.

Charles Hendry: I welcome the fact that the first time we have come to discuss nuclear policy under the Bill is when talking about issues of decommissioning. That shows that the two matters must go hand in hand. We have debated a new generation of nuclear plants many times. I was rummaging through my collection of old copies of The Guardian the other day.

Malcolm Wicks: As you do.

Charles Hendry: As I do. I came across the issue of Friday 10 June 1983. The other 4,500 copies in my collection seem to have been lost, but for some reason I kept that one. The front page says, “Seven nuclear plants planned”. One can tell that it is The Guardian because that is the lead story and the second story is that the Tories won the general election. It was being said in those days that Sizewell B would be the first of a tranche of seven new reactor and it was said that it would be up and running by 1990. What wishful thinking that was. Nevertheless, we have discussed many of those questions before, and it is good that the House has had the chance to look at them again.

Malcolm Wicks: Will the hon. Gentleman give way?

Charles Hendry: Indeed. I was about to celebrate the Minister’s own personal journey.

Malcolm Wicks: Will the hon. Gentleman be outlining any other Tory broken promises today?

David Amess: Order. Tempting though that may be, I ask the hon. Gentleman not to respond.

Charles Hendry: I wish to reassure the Minister that the days when people say, “Tories on course for a landslide” are on the way back. History is on the verge of repeating itself.
We wished also to celebrate the Minister’s personal journey from being an anti-nuclear campaigner. As he mentioned, he used to go around the country saying, “Och, och, och, there’s a monster in the loch”. Now he walks up the coast of Suffolk saying, “Look, look, look, we want another nuke”. Throughout his journey, we have seen how we must address these issues.
We must consider decommissioning and waste in the context of the general approach to nuclear policy. The Government’s role in energy policy should be to seek energy security and as much energy as possible from no or low-carbon sources. That means that the Government should set the framework, and business should decide where to invest. The Government should not micro-manage or decide exactly where that investment should go. We have seen that the Government cannot readily build a dome or a football stadium, so what hope would they have of putting in place and constructing an entire national energy policy?
Within the national energy policy, the Government should seek to be technology-neutral. Our view is that if people wish to invest in nuclear energy, they should be free to do so. There should be no principled objections to it. Nevertheless, new build projects must be subject to certain criteria. There should be no subsidy; the full running, building, decommissioning and waste costs must be covered by the companies that are seeking to build the new reactors. My understanding is that we and the Government are essentially at one on that consideration.
Of course, there will some debate about what “no subsidy” means. Liberal Democrat Members have referred to it this morning. No subsidy does not mean that contractors cannot agree contracts with Government bodies to buy the energy that they produce. That is how the new-build programme was partially funded in Finland, and it is a legitimate commercial arrangement. It does not mean that those businesses must be responsible for the waste-management costs for the next 100,000 years. Certainly, they should be responsible for the management of the waste when it is on site, and for the cost of disposal. However, after a given period, it is right that the Government should take on the management of that programme, but with the companies that have created the new waste covering the costs of their portion of that waste.

Martin Horwood: I was merely seeking to clarify the point of who would be responsible for the very long-term storage of waste if the contractors were not to be. However, the hon. Gentleman may have answered my question.

Charles Hendry: The approach that the contractors would take out a bond that would contribute towards any additional costs of the residual management of that waste over a longer period is the right one. It should not fall on the taxpayer; it must be covered by the companies themselves. However, the hon. Member for Copeland was absolutely right to try to separate the matters of legacy waste and new-build waste. It would be nonsensical to have a deep repository for the long-term storage of legacy waste, funded by the taxpayer, and to build a new repository for the much smaller amount of new waste. It is inevitable that they will be stored in the same place. The Government make that point in the White Paper, in which they also state that there will therefore be incremental costs for storing that additional waste in the repository and for the infrastructure implications. Those are the costs that the industry should bear.
We also think that there should be a level playing field for new-build nuclear projects. That means addressing the issues of site and type approval and also having a streamlined planning approach. We are not happy with the Government’s approach to the infrastructure planning commission, but that is obviously a matter for a different Bill. In order for a streamlined planning approach to happen, various things must be recognised. First, the nuclear installations inspectorate needs to have the necessary resources. Unfortunately, it looks likely that it will not now be able to evaluate the different types of reactor before it. In the next few weeks, we expect that it will have to narrow it down from four reactor types to three and it is unfortunate that it does not have the skills base available.

Steve Webb: Clearly, the cost to the NII of inspecting potential new sites falls into the category of the incremental costs of the new generation, which the hon. Gentleman mentioned. Given that it is incremental, should not that cost be met by the industry to avoid public subsidy?

Charles Hendry: The work that the NII does at this stage when it evaluates different reactor types is essentially work on behalf of the Government in assessing which ones should be allowed to go forward. That work would not be done if there were not a new build programme in place and I think that it would be right for contributions to be made from the industry towards the cost of the NII’s work in that area. However, I also hope that the NII will be given the staffing levels that it requires because it cannot cope with its current workload.
We must build several reactors of a single type. If we go down the path that we have taken before—having one of this type, two of that one and one more of something different—the whole new programme will become completely unaffordable and unimaginable. We must recognise that we will probably end up with a fleet of a number of reactors to the same design type. We must also ensure that not too many add-on extras are included during that process. During the evaluation of different reactor types, I hope that the Minister will urge the NII not to say that every possible bell and whistle must be added on. That is what happened with Sizewell B—it added £1 billion of extra costs and some of the elements that were included have never been used in over 10 years of operation. That is an important matter.
We are more generally concerned about the skills base within the nuclear sector. It is encouraging to look at places like the university of Central Lancashire and the courses that it wishes to lay on and develop, and at Southampton university, which is keen to develop expertise in those areas. I hope that the Minister will tell us how the Government plan to build up the skills base in this area, and how he will keep Parliament informed about that.
My own approach has been greatly influenced by what I have seen. The various journeys that I have made are covered in the Register of Members’ Interests and include visits to not only nuclear but wind, oil and gas facilities. I had the opportunity to go to Sizewell B, which is an absolutely extraordinary plant. It has been operating for a year and half at full tilt, and for those who have concerns about the security of modern nuclear plants, bearing in mind that it is over 10 years old, it is an incredibly safe facility and a great credit to the industry.
I also had the opportunity to go to Oskarshamn in Sweden, where a model is being built for the sort of repository that is thought appropriate for deep disposal. I urge all those who are sceptical about nuclear waste disposal to go to look at that facility. It is 500 m underground and they take 10,000 people a year down there. Because of its communications programme, it has managed to get 80 per cent. support within the local community for the burying of nuclear waste in that location. When Nirex appeared in the 1980s, there was 100 per cent. objection to nuclear waste being buried in those communities. However, if we look at how the Swedes have done it, with the thoroughness of their technology, their scientific approach and their approach to involving the local community in trying to persuade it about the right approach to deep disposal, we could learn some significant lessons. I came away convinced that we could manage the long-term deep disposal of waste in a constructive and safe way.
I was also struck by the way in which waste is stored on site; in that nuclear facility, it is kept in pools of water. Somebody on the edge of the pool is a little further away from it than from where I am to where the Minister is, but not by much. If someone stands on the side of the pool with a millisievert counter that measures how much radiation there is, the counter does not move. I did not get any radiation. I was rather disappointed as I had hoped to get a small amount—0.1 or 0.2 millisievert—to know that I had genuinely been there. I got much more radiation in the course of the aeroplane flight on the way, not to mention the carbon issues that will have gone with that. It is fascinating to see how that waste is stored safely on site. If we have doubts about the programme, we should investigate how it is done so that we can be reassured.
We are told by those in the industry that they are happy to invest on that basis of being responsible for their full-term costs and not having a subsidy. Clearly, the greatest issue of concern to the public is how the waste would be handled in the longer term. On Second Reading, I said that I would table an amendment whereby that the industry could not start to operate a new plant unless a site had been identified. We wanted at that point to drive forward the Government’s work in identifying a suitable long-term repository. We have not tabled that amendment because on further reflection we felt that it was not the right way forward. I was persuaded that it would be possible for a site to be found which, on further geological investigation, proved to be inappropriate, so that people would have gone ahead with their investment plans only to have the carpet pulled from underneath them as they got close to it. That would be unacceptable. I was also persuaded that it would give an incredible power to local authorities. If a site was identified and it seemed to be going ahead, an authority could say, on the day before the announcement was due to be made, “Hang on guys, we need another £50 million on this if we are going to do it.” That would give them an unacceptable amount of influence.
I was also concerned that we should not give a signal to the industry that we were seeking to obstruct its investment. We understand that boards around the world are looking with great care at the United Kingdom market, but they are also looking at other markets where they could invest. If we want them to feel that the UK is a suitable place, they have to feel that a potential alternative Government would not put additional hurdles in their way or obstruct the investments that they are seeking to make. It behoves us above all to take a responsible approach to this. We aspire to be a Government. There will be different views on both sides of the Committee about this, but we have to be realistic in our approach.
We are encouraged by the approach taken in the Government’s White Paper on nuclear power published in January. The conclusion on page 99 bears repeating:
“The Government considers that it would be technically possible and desirable to dispose of both new and legacy waste in the same geological disposal facilities and that this should be explored through the Managing Radioactive Waste Safely programme. The Government considers that waste can and should be stored in safe and secure interim storage facilities until a geological facility becomes available.
Our policy is that before development consents for new nuclear power stations are granted, the Government will need to be satisfied that effective arrangements exist or will exist to manage and dispose of the waste they will produce.”
That strikes the right balance in this equation, and we are looking to move things forward with the Government on that basis.
I have a couple of specific questions. Clause 41(3)(a) refers to “written notice”. What does that mean? Does it just mean an e-mail to the Secretary of State saying that this is what is being considered? Is there a standard form that will be expected to be filled out? Can the Minister give us some more information about that? Subsection (7) concerns decommissioning standards and processes. Who will set those? There seems to be a chicken and egg situation. Should not the Government first set the standards for decommissioning so that industry knows what it is estimating the costs for, instead of expecting the industry to come forward with its own estimates which may then prove to be unacceptable to the Government? The Government should take the lead here. The Minister may intend that that is what the Government would do, but otherwise industry will try to guess what is in their mind. That would be an unacceptable way forward. This may be covered in clause 50 on the regulations and guidance, but it would be useful to have some clarity.
More generally, how can costs be estimated, given how construction prices will change? Decommissioning will be carried out in 60 or 70 years’ time, and if there is 10 years or so before the first plant is going to be operational, they will then have worked for 40 or 50 years. We are looking a tremendously long time ahead. What mechanism does the Minister propose to build in to ensure that the funds will be available to reflect the actual costs at the time when decommissioning takes place? What would happen if there was a fundamental shift away from nuclear in that time scale ? For example, what if there was a massive advance in carbon capture and storage technology, renewables or fusion, which my hon. Friend the Member for Northampton, South often talks about, and that made nuclear no longer economically viable? How is decommissioning going to be carried out, if the plant is not going to be operated for its full cycle, and how would we ensure that the fund had enough in it to look after the waste that had been generated during that time?
I hope that the Minister will see from the comments that have been made that we are seeking to work with him in as constructive a way as possible. I know that some people have deep concerns about nuclear power and how it goes forward. Our obligation is to try to ensure that if people decide to invest in it, they do so in a way that fully takes account of the costs involved in the programme but, above all, provides safety for the nuclear waste and decommissioning regime.

Jamie Reed: There is a welcome outbreak of cross-party consensus on the issues that we are facing and discussing, particularly those which the shadow Minister raised about regulation and the burden on the NII. In recent months, considerable movement has been made to help the NII with its staffing structures and systems to meet the new nuclear challenge. He also talked about the four reactors being whittled down to three. I would advocate going for this now and looking at only two.
The hon. Member for Wealden also talked about the need to have only one reactor type licence in the UK to make the new nuclear project work. I would like to dissuade him on that. We need more than one reactor type. Of those that I believe are likely to be licensed and operated in the UK, the Westinghouse AP1000 and the Areva EPR are the most likely types that we should be considering. In fact, if we are looking at costs, expediency and bringing generation to the marketplace quickly, it may be that we should look only at EPRs, given that they are much bigger than AP1000s and we would need fewer of them. These are obviously costs for the NIII and the Department.
On skills, we now have the National Nuclear Laboratory, coincidentally based in my constituency. I should declare an interest as a former employee of Nirex and because the NDA’s headquarters are in my constituency. We have heard a lot of talk from Opposition Members of both parties about Nirex and the costs associated with it. Nirex no longer exists or has any legal responsibilities at all—the NDA subsumed those at the end of 2006, and I was active in ensuring that that took place. We are are developing a skills base in the UK, with the national skills academy for nuclear, based just outside my constituency in that of the hon. Member for Workington (Tony Cunningham)—a £35 million project supported by the NDA, the North West Development Agency and the industry. In addition, there are the courses that are going to be undertaken by the university of Central Lancashire, the nuclear decommissioning courses and nuclear skills and training courses that are going to be provided by the fledgling university of Cumbria, the National Nuclear Laboratory, and the establishment of the university of Manchester’s Dalton nuclear institute in Cumbria and the Wesklake science park in my constituency. Those developments mean that the industry’s skills base is set fair not only for the foreseeable future but for its long-term needs and interests.

Steve Webb: I want to add a few observations on new clause 23. In the well-informed and thoughtful contributions that we have heard from around the Committee, I am yet to hear an argument against it. The principle that the new clause is getting at concerns incremental costs. When I intervened on the hon. Member for Wealden, he said that the incremental costs of the NII, for example in relation to the next generation, might legitimately be regarded as an incremental cost and therefore that the industry should bear it. I did not hear during his interesting remarks whether he supported the new clause. Presumably, to the extent that there are incremental costs of the NDA, over and above the legacy costs, why should not the industry bear them? It may turn out that these costs are not that great. The costs of setting up new generation nuclear power in the period that we are talking about may not involve very large sums of money, which makes it all the harder to see why the principle is being resisted.
It has been suggested that we are being inconsistent with carbon capture and storage and long-term nuclear waste. That is an interesting question that I want to respond to. The fundamental difference between the two is that we cannot, in any foreseeable future, avoid using more carbon and generating more CO2 that we want to capture and may have to store. That is not a choice variable for us now. We will be burning carbon for the foreseeable future, so we are going to have to do something with it. We want the carbon captured and stored, and we want to make that happen. On the other hand, we have a choice about whether to generate new nuclear waste. That is the fundamental difference. We know we have a problem with carbon; as the hon. Member for South Thanet said, we do not want it but we are lumbered with it. We therefore want to encourage industry to generate carbon capture technology.
The Government’s position is not to incentivise new nuclear but to be hands off. As the Secretary of State said in his statement to the House on nuclear, they are not mandating new nuclear but simply saying that they will let it happen, but who should bear any incremental cost? New clause 23 says simply that the industry should bear it. We have given the NDA as an example, and the NII would be another one.
The new clause is relatively simple, and to return to what one might call planet Conservative, the hon. Member for Northampton, South made a point which would, I think, go further than his Front-Bench colleagues. I have observed that he is a free spirit. He may well want to incentivise new nuclear energy. He wants to send a very positive signal, and might be willing to say, “Look, we will pay a few of these on-costs if that sends the right signals.” That is not the position of his Front Bench colleagues at the moment. I have heard the shadow Secretary of State say “No subsidies.”
NDA, NII and other incremental costs are subsidies in a way that some of the other things that the hon. Gentleman mentioned probably are not. I accept that public sector purchase of nuclear energy—if we have got it—at the market price is not a subsidy. However, such additional costs are incremental, and the industry should therefore meet them. It seems an entirely reasonable and rational proposition that, if new nuclear comes forward, whatever one’s views about it may be, the industry should meet the incremental costs. That is all we are trying to ensure.

Malcolm Wicks: Good morning, Mr. Amess. This has been a very interesting and full debate, and I am afraid that I may need to take a few minutes to answer the rich array of questions. I will try first to set out our arguments about the new clause and then go on to answer some of the more specific and sometimes quite technical, but important, questions that have been asked.
As I mentioned during the last sitting, we are creating a framework to ensure that the operator of a new nuclear power station is responsible for and makes prudent provision to meet the full costs of decommissioning and its full share of waste management costs. That objective was stated in our nuclear White Paper, published in January. The effect of the framework is to ensure that, once a new nuclear power station has been decommissioned, the operators of that station, having made provision for the back-end costs throughout its generating life, return the site to a state agreed with the regulators and the planning authority—it is likely to be similar to greenfield.
The new clause would allow the Secretary of State to make regulations to include the value of grant payments made by the Secretary of State to the NDA for the purposes of new build waste and decommissioning costs. That would allow Parliament to scrutinise payments related to new build made by the Secretary of State to the NDA for the disposal of intermediate-level waste and spent fuel. Although the proposed effect of the new clause is not completely clear, I believe that the intention of the hon. Member for Northavon in tabling it is to allow the Government to set out now, in legislation, the costs that will be charged to operators for waste disposal, and how those costs will be calculated and allocated to the Government and the NDA.
Before I go on to speak in more detail about the new clause, let me clarify that the Government anticipate no statutory role for the NDA in relation to the decommissioning and on-site waste management of new nuclear power stations. Those activities will be carried out by the operator or by contractors working for the operator and will not be covered by the fixed price the Government intend to set for the disposal of intermediate-level waste and spent fuel.
The Government are currently considering the best approach to scheduling when and how funds to cover the fixed unit price for waste disposal should be paid by new nuclear operators. As we made clear in the White Paper and in the consultation on the guidance published on 22 February, the Government intend transparently to set a fixed price for the disposal of intermediate-level waste and spent fuel. The Government also intend, again transparently, to agree a schedule of payments with new nuclear power station operators in advance of the construction of a new nuclear power station.
In so far as it concerns regulating the way in which the fixed price is set, the new clause is therefore unnecessary. The method that the Government will use to calculate waste and decommissioning costs was published as part of the draft guidance consultation. We also set out a road map that contained an indicative timetable for publishing projected waste disposal and decommissioning costs based on the technical guidance and the methodology set out in the consultation.
A fixed price for waste disposal would have to be agreed for each new station to ensure that the sum is based on the most up-to-date information available. That sum would have to be set out in the operator’s funded decommissioning programme since it will impact on the target amount for the independent fund. Those who are responsible for the fund will measure the performance of the fund against that sum regularly throughout its life. Taken together, we believe that those steps should ensure adequate transparency about the way in which the sum is calculated and charged. The Government have not yet determined how moneys payable by the operator in relation to the waste disposal service will be paid into public funds. Some of those matters are touched on in the consultation. The new clause is therefore not only unnecessary, but premature.
It is clear that the Committee has a keen interest in what role is envisaged for the NDA in relation to new nuclear build. The NDA has clear primary objectives, which are to clean up legacy stations and waste under the Energy Act 2004, to develop low-level waste solutions and to implement the geological disposal for higher activity wastes. The work that the NDA is doing to develop a parametric cost model for a geological disposal facility will continue to feed into work to establish a fixed unit price for the disposal of intermediate-level waste and spent fuel. In addition, in the past, the NDA has provided expert advice on British Energy’s decommissioning plans. There could be a role for the NDA, with its expertise in decommissioning and radioactive waste management, in providing similar advice for new build operators, the managers of the independent funds or the new advisory body that the Government will set up— namely, the nuclear liabilities financing assurance board.
The Government and the NDA will need to take a view on whether it is appropriate for the NDA to play such a role in providing such advice for new build in the light of the NDA’s primary objectives. I reiterate that we have no intention of subsidising new nuclear. With the Bill, we are taking steps to ensure that the risk of costs falling to Government is remote at all times. We have already said that operators will be required to pay their full costs of decommissioning and their full share of waste management costs.
By full decommissioning costs—we had a useful exchange on this during our last sitting—we mean dismantling the plant at the end of its operational life and returning the site to a condition agreed with the regulators, which is likely to be a state similar to greenfield, depending on the state of the site before the construction of the station. By full share of waste costs, we mean the costs that are directly attributable to disposing of new build waste in a geological disposal facility; a contribution towards the fixed costs of building a geological disposal facility, which is a very important provision; a significant risk premium over and above those costs to take account of uncertainties about the cost of constructing a geological disposal facility and the time when it will be able to accept new build waste; and the costs of managing that waste pending disposal or pending transfer for disposal. I put it to the Committee that that very full list shows our ambition and, indeed, determination that a full share of costs will be met.

Martin Horwood: The Minister is saying many encouraging things, but he is not saying explicitly—perhaps he could do so now—whether the sum total of what he has said amounts to the whole work currently provided for the legacy nuclear power stations by the NDA being wholly funded by the private sector with respect to new nuclear. Is that what he is saying in crystal clear terms?

Malcolm Wicks: I have explained that the primary objective of the NDA is to clear up our legacy of nuclear waste. What I am at pains to say is that we are doing our utmost to ensure that, as new waste is produced from new nuclear power stations, the full cost will be met by the private companies. I do not know whether that has clarified the point for the hon. Gentleman, but I shall continue, because a number of specific points will come up soon.
We are committed to ensuring that we have a robust framework in place that will enable the private sector to make proposals for building new stations, while minimising the risk to the taxpayer. Such a framework will provide certainty on the operator’s waste disposal liabilities. We will reflect carefully in the coming weeks on the debates in Committee and take into account representations and responses from the guidance consultation to see whether we need sensibly to make any further provision to secure our goals.
I shall deal with some of the questions that were asked. The hon. Member for Cheltenham asked who covers the cost of the NII. The costs of the NII will be recovered from operators, as is currently the case with its costs for regulating existing nuclear installations, and operators will be expected to make provision in their independent funds to meet those costs. I hope that I have satisfied the hon. Gentleman on that point.
The hon. Member for Wealden asked about the related but slightly different matter of staffing requirements, which has been of concern to us. The Health and Safety Executive estimates that, in the current circumstances, around 230 full-time equivalent nuclear safety inspectors will be required at the peak of its programme of nuclear regulatory work. Following the pay agreement in November, the HSE launched a recruitment campaign for new inspectors in December, and I understand that it has had a good response. Interviews will be held by the end of March and a new campaign will be launched shortly in the light of the Government’s January announcement supporting new build.
The hon. Member for Cheltenham asked about the costs of Nirex, which is subsumed within the NDA. We believe that it is right and proper that the Government are finally taking responsibility for cleaning up public sector legacy waste. Nirex no longer exists, but in any event, its costs were met by the industry. He also asked who funds the NDA and whether new operators will pay towards those costs. I hope that I have partly answered that, but I emphasise that the NDA is funded by public funds and the income that it generates. Operators of new nuclear power stations will cover their full decommissioning costs and their full share of waste management costs. The NDA’s primary function relates to the legacy, as we have said. In so far as it will be involved in new build, the costs will be met by operators—for example, through the fixed unit price that they will pay for the disposal of intermediate-level waste and spent fuel.
The hon. Member for Cheltenham asked about insurance for major incidents. I remind the Committee that the Paris and Brussels conventions set a financial limit for operator liability in the event of a nuclear incident, above which public finds may be used to meet third-party liability. They are set out in European Union law, and we have no option but to follow them. In exchange for that, the operator accepts strict no-fault liability for personal injury and third-party property damage caused by nuclear matters for which the operator is responsible up to the cap. That provides legal certainty not only for operators, but for potential claimants who, in the event of a nuclear incident, would know against whom to make their claim. It will also ensure that claims are not unduly complicated or lengthened by having to prove fault or having multiple defendants and cross-claims. Operators are required to have insurance or other financial security to cover the costs of any claim up to the cap.
The Government do not provide any insurance to cover such damages. It is possible that they may do so in the future, because the Paris convention has been amended to cover types of damage for which commercial insurance is not currently available. If the Government do provide insurance, we would charge the operators a premium for it.
Again, the hon. Member for Cheltenham asked about the costs of the new advisory board that we are setting up on nuclear financial liabilities. Let me reassure him that we intend to recover costs, such as those for independent advice provided to the board by nuclear power station operators. The operating costs of the board should be recoverable under the Bill. In other words, we want to ensure that the operators will pay those costs. That will include any independent advice that they seek. As a non-statutory body, there will be no ongoing financial commitment created by the formation of the board.
The hon. Gentleman asked a question, which was taken up by my hon. Friend the Member for Copeland, about military nuclear costs vis-Ã -vis civil nuclear power costs. I understand that an inventory of the radioactive waste that the UK has to dispose of is produced and updated by the NDA. That inventory identifies the amounts and types of waste that have been produced by different nuclear installations, including military waste and waste from civil nuclear plants. Based on that inventory, it should be possible to estimate the proportion of the costs for dealing with legacy waste that is attributable to military activity and that which is attributable to civil nuclear power stations.

Steve Webb: And the answer is?

Malcolm Wicks: I am saying that it should be possible to do that. As I understand it, we do not currently have data on that matter. Does the hon. Gentleman not accept that we have a legacy commitment? It is not at all clear to me whether the Liberal Democrat party understands that there is a problem to be dealt with and whether it supports the Government in dealing with it. Would it rather—I hope, not literally but perhaps metaphorically—brush it under a carpet somewhere? I am not clear whether the Liberals understand the legacy that we have and the Government’s determination to tackle it.

Jamie Reed: May I try to shed some light on this issue? After the Committee finished last week, I studiously went to the National Audit Office hearing, which discussed the NDA’s accounts. I listened with real interest and it was explained to that committee that the cost of decommissioning historic reactors in this country is approximately £16 million out of the current £73 billion liability cost from the NDA. The remainder relates to the military programme.

Malcolm Wicks: I am grateful to my experienced colleague for that intervention.
The hon. Member for Northampton, South asked about the fees that will be charged by the Secretary of State. As is the case with the NII, the Secretary of State will look to recover costs incurred through fees charged for assessing funded decommissioning programmes. We will lay regulations in due course to set out those fees. I cannot give a figure, because we will not know it until we have established the nuclear liabilities financing assurance board.
The hon. Member for Northavon asked who will pay for generic design assessment. The regulators will recover the costs of the GDA process from the requesting parties—the vendors of nuclear reactor designs who have applied to have their designs assessed.

Alan Whitehead: I have a genuine question that I do not know the answer to. Will any requester of generic assessment, whose submission is not assessed during the process, have new rights to recover any costs from their submission or to legal redress on the grounds that their submission has not been assessed?

Malcolm Wicks: We have something in common: I agree that that is an interesting question but nor do I have a precise answer. If an answer arrives, I will let my hon. Friend know.
I was about to say, however, that we believe it right that the regulator’s resources should be focused on those designs that have the greatest chance of being built in the UK. It is right that the generic design assessment process should be carried out in a reasonable time frame. The Government are keen to ensure that a competitive number of designs is assessed. Given those objectives and the resources involved, reducing the number of designs assessed from four to three is sensible, and we expect to hold a prioritisation process shortly. The hon. Gentleman raised an important question. If I can help him with an answer later, I will.

Stephen Ladyman: To what extent are we expecting the inspectorate to reinvent the wheel? Those designs have been approved in other countries, which are every bit as clever and as experienced as us at nuclear matters. Much of the information will be in the public domain already and will have been considered by the inspectorates of other countries. To what extent are we reinventing the wheel and to what extent are we adding value to the process?

Malcolm Wicks: I understand that question, which raises an important issue. I need to be careful, as a layperson, because of the independence of the assessors. It is important that professionals in the HSE and the nuclear inspectorates do their work. However, my hon. Friend raised an important question. As a layperson, I would have thought that we should avoid the danger of, as he puts it, reinventing the wheel. I am sure that our inspectorate would take into account whether a reactor or piece of kit has been assessed elsewhere in the world, by people whom we respect and whose professional integrity we accept. The process is complex and will take some time, but it should not be elongated for the sake of it. That is the point that my hon. Friend raised.
The hon. Member for Wealden raised the important matter of skills, which is of concern to us and across industry. We need the skills base to develop for Britain’s industrial and business base in the 21st century. As the hon. Gentleman knows, the National Skills Academy for Nuclear has now been established. It was developed with industry and the sector skills council, Cogent. I was fortunate enough to be asked to speak at the academy’s launch, in the Science museum, only a few weeks ago. The academy will help recruit and develop skills. In its first three years of operation, it aims to start in training 1,000 apprentices and 150 foundation degree students and to retrain 4,000 existing workers. The academy is part of the answer—it is good news.
My hon. Friend the Member for Copeland has already talked about the work of the national nuclear laboratory. The hon. Member for Wealden acknowledged that many universities, encouraged by the Government’s decision, are now tooling up with courses of different kinds. That is important. Outside the immediate nuclear industry, my Department is assisting Energy and Utility Skills, the sector skills council for electricity, gas, water and waste management, together with relevant employers, to develop a skills strategy for the electricity sector.
The hon. Member for Wealden asked how we could get the costs right. Our cost estimates are being built using the best available information and data—more importantly, tested by external experts. We are working closely with the NDA in that exercise and will update the cost estimates as new information becomes available. The NDA is producing, as I said, a parametric cost model: the parameters can be changed to examine the cost implications of different scenarios. For example, the model can vary parameters such as rock type, depth of repository and waste inventories to reflect the impact on costs. The fixed unit price offered to operators will be set on a case-by-case basis and not agreed until such time as an operator comes forward with investment proposals.
The risk premium added to the fixed unit price will reflect what certainty we have in the cost estimates at the time an operator requests a firm fixed unit price. Over time, we will develop a greater understanding of the costs of disposing of intermediate-level waste and spent fuel, which might enable the Government to reduce the risk premium required. However, in the early stages, we expect that risk premium to be significant, to reflect our level of certainty in the cost estimates. For decommissioning and waste management costs, there will be a fixed price. Those costs will be calculated on the basis of risk, uncertainty and inflation-adjusted estimates and will be regularly reviewed. Contributions to the fund will be modified accordingly.

Charles Hendry: I am grateful to the Minister; his response is helpful. In the event that the risk premium were not used—because the Government’s initial costing was incorrect and the premium was therefore not required—would that money be returned to the companies involved or would it be kept by the Government?

Malcolm Wicks: I am pretty sure that it would not be returned. It is a premium that will be paid and is part of the commercial costs. The hon. Gentleman asked me who would set the decommissioning standards. In the consultation that we published on 22 February, we set out guidance to operators on the technical steps that the Secretary of State will expect them to include and cost in their funded decommissioning programmes. Those steps are called the base case. It is based on existing policy and regulatory requirements, with some additional assumptions to ensure that it represents a comprehensive means of estimating the costs. Operators will be able to propose alternatives to the base case in their funded decommissioning programme, and the Secretary of State will consider those on a case-by-case basis. It is right to encourage innovation in safe and efficient decommissioning techniques. Operators will always be required to satisfy the requirements of the regulators.

Hugo Swire: When the Minister and his Department were updating the base case and the criteria surrounding that, did he or his officials look at other cases for decommissioning in Europe and other parts of the world? We have heard from my hon. Friend the shadow Minister about Sweden, for instance. Clearly there are lessons to be learned from other countries. When the Minister updated the base case, did he look at those other countries?

Malcolm Wicks: Yes. It might be helpful if later, or in writing, I gave the hon. Gentleman more information. We are aware of international experience. Colleagues and I visited the site in Finland where they are building a geological repository. I will give the hon. Gentleman more detail if I can.
The hon. Member for Wealden asked what would happen if changes in technology meant that nuclear were no longer financially viable. We would expect an operator’s funded decommissioning programme to have financial security in place, so that in the event of early closure, the operator could meet full decommissioning costs and its full share of waste management costs. The cost profile of nuclear—high fixed costs but low running costs—will make it unlikely that, once operational, developers will chose to stop generating electricity.
I might have to return to one or two other points in due course. The hon. Gentleman asked me what “written notice” in clause 41(3)(a) meant. We expect discussions to be initiated by the operator long before a programme is submitted. We will give an indication of that process on pages 38 and 39 of the draft guidance. Formal submission would take place before construction. Written notice would form part of the submission of the funded decommissioning programme.
My hon. Friend the Member for Southampton, Test asked whether a vendor whose submission was not assessed would be able to recover costs. I am advised that if the number of designs to be assessed is reduced from four to three—I have said that that is likely—the costs already incurred by the vendor whose design will no longer be assessed will not be refunded by the NII. The NII must recover its costs for work carried out: all the vendors currently going through generic design assessment were made aware before the process started that the number of designs was likely to be reduced before the detailed assessment began and that payments made to NII would not be refunded. All four vendors chose to proceed on that basis; I guess that it comes down to commercial risk.
I was asked by my hon. Friend the Member for South Thanet about the extent of the NII’s work on the standard design. There are obviously advantages to having standard designs that have been deployed overseas, but it is also important that reactor designs satisfy the regulatory requirements here in the UK. I want to assure my hon. Friend at this stage that the inspectorate is working closely with overseas regulators to take advantage of their knowledge and expertise.

Martin Horwood: I thank the Minister and all hon. Members for their comments. The hon. Member for Glasgow, North-West suggested that our new clause did not go far enough in seeking to establish the liabilities of the nuclear industry. I would be happy, therefore, to contemplate supporting any amendment he wants to table to make it more comprehensive. That would be perfectly welcome.
The contribution of the hon. Member for Northampton, South was very refreshing. It is good to see someone who is a nuclear Tory and proud of it. I had begun to think that the right hon. Member for Witney (Mr. Cameron) had turned the entire Conservative party into readers of The Guardian. Now I discover only the hon. Member for Wealden is still in that category.
The hon. Member for Wealden made an important contribution, producing a nostalgically yellowing newspaper from the long lost days when the Conservatives used to win general elections. He was very robust in some of his statements. He said absolutely that the Conservatives wanted no subsidy, and he raised the legitimate question of what will happen if technology changes and the nuclear industry becomes a dying industry, with many companies facing insolvency. We discussed that important issue at some of the evidence sessions.
The hon. Gentleman seems to be trying to stick to his robust line of no subsidy, yet it was also a virtuoso performance in demonstrating his party’s flip-flopping on the nuclear issue—because, at the same time, he seemed very concerned not to put too many hurdles or barriers in the path of people wanting to invest in the nuclear industry, even to the extent of asking for them to have the right to have their insurance premiums back. He must have entertaining discussions with his house insurers if he ever tries that argument with them.
Clearly, the reality is that, if those of us who really are arguing for a policy of no subsidy actually succeed—and I think we have made great progress on this today—and if all the possible liabilities and costs of decommissioning that at the moment run into billions of pounds per year are taken on board, I doubt that any sane investor would touch this industry with a barge pole. If that is the consequence of this policy of no subsidy, Liberal Democrat Members are certainly willing to accept that. We would have to find alternative ways of filling the energy gap described by hon. Members.
The hon. Member for Northampton, South said that the lights might go out if we did not make progress on this issue, but that is not true. The truth is that neither nuclear nor renewables are likely to be fully on stream within the decade or so required to fill the so-called energy gap. That gap will almost inevitably be filled by coal or gas-fired power stations, and that is why carbon capture and storage is so vital and why we place so much emphasis on it in other parts of the Bill. That transitional technology will eventually lead to a different kind of energy future.
The hon. Member for Glasgow, North-West talked about the kind of energy policy we might have in 100 years’ time and whether we could predict it. He suggested that we could not, and that is the whole problem with nuclear—it raises risks and policy questions for hundreds of years, probably millennia, into the future.

John Robertson: The hon. Gentleman is being selective yet again. That does not apply just to one form of energy; it applies to them all.

Martin Horwood: I am grateful to the hon. Gentleman for his intervention, but I will resist the temptation to enter into a discussion on the unique nature of radioactivity and why I believe there is a particular problem with nuclear energy.

Jamie Reed: I think today has been listed, “Why not be generous at Committee day?”, and I thank the hon. Gentleman profoundly for giving way. In Norway, whose economy is based upon oil and gas exploration, and throughout the European Union, it is widely recognised by scientists that the extrapolation of those materials produces radioactive discharges that would not ordinarily be brought into the environment. Backed by their Government and facilitated by their oil and gas companies, the Norwegians retain the radioactivity produced as a result of oil and gas exploration and store it in a repository in Himdalen. Does the hon. Gentleman think that that is a potential way forward for the oil and gas industry in Britain?

Martin Horwood: I am grateful for the hon. Gentleman’s intervention and particularly for the crucial words, “Backed by the Norwegian Government.” That is the common theme to most of the nuclear storage and decommissioning proposals and policies that we are discussing. I would happily entertain any technical suggestions from Norway that he would care to communicate to me.
The Minister answered many of the issues that I addressed. He was comprehensive in his comments, looking at the legacy of Nirex and the NDA, the equivalent decommissioning costs for new nuclear, and the proposed NLFAB. He was clear that, under his policy, in all those cases along with the nuclear installations inspectorate, the operators were intended to pay. However, in his genial and reassuring manner, he was still very careful with his use of language, which I noted down. The record will show that he said that there was no intention of subsidising new nuclear and that the Government would do their utmost to ensure that operators take up the full cost. That falls short of a complete reassurance, and the debate on the issue will continue. There is a great deal to be said about the need to provide the taxpayer with an absolute assurance that the billions of pounds of wasted public money, which was part of the legacy of the first generation of nuclear power stations, will not be repeated with the second.

Malcolm Wicks: First, I take the opportunity to return to the question raised by the hon. Member for East Devon. He asked whether we had looked at the experiences of some other countries when developing the base case, and I briefly assured him that we had. However, let me say in a little more detail that the base case is built on existing policy and standards. Much of it has been built following the consideration of a number of factors, including international experience. As we have said, the base case assumes that higher activity waste will be disposed of in a geological disposal facility. All countries with a nuclear programme that have decided what to do about the waste in the long term, have adopted a strategy of interim storage followed by geological disposal. I hope that that reassures the hon. Gentleman that we have looked carefully at the evidence.
I am advised that earlier I accidentally said—and it was an accident if I said it—that decommissioning would be subject to a fixed price. I meant to say disposal, so for the sake of getting the record straight, let me say that decommissioning and waste management will not be subject to a fixed price. Operators will be required regularly to reassess cost estimates for decommissioning and waste management, and to modify contributions to the fund accordingly. Only the cost of disposal of intermediate waste and spent fuel will be covered by a fixed unit price. That is my understanding of the situation, but I apologise to the Committee if I slipped up over some words. I hope that sets the record straight.
The hon. Member for Cheltenham was generous in his remarks. The Government and I are at pains to make sure that the principle that there should be no subsidy by the taxpayer be put into practice in the long term. We have looked very hard at that. By establishing the advisory board, we have put in place the potential for a good organisation to help ensure that we are on track. I think I have reassured the hon. Gentleman on a number of issues, such as the cost of the inspectorate, and would like to think that, despite his scepticism about new nuclear, he understands our good intentions. We have tried to ensure that the principle will be put into practice. Nevertheless, I expect he is right to say that the debate will continue.

Question put and agreed to.

Clause 41, as amended, ordered to stand part of the Bill.

Clause 42

Approval of a programme

Charles Hendry: I beg to move amendment No. 31, in clause 42, page 38, line 7, at end insert—
‘(d) Nuclear Decommissioning Authority,
(e) relevant local authority.’.

David Amess: With this it will be convenient to discuss the following amendments: No. 41, in clause 42, page 38, line 7, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
No. 32, in clause 42, page 38, line 14, at end insert—
‘(d) relevant local authority.’.
No. 33, in clause 45, page 39, line 32, at end insert—
‘(d) relevant local authority.’.
No. 42, in clause 46, page 40, line 13, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
No. 34, in clause 50, page 44, line 10, at end insert—
‘(d) the Committee on Radioactive Waste Management,
(e) the Nuclear Decommissioning Authority,
(f) the relevant local authorities.’.
No. 43, in clause 50, page 44, line 10, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
No. 40, in clause 51, page 44, line 29, at end insert—
‘(3) Regulations may establish a Nuclear Liabilities Financing Assurance Board (NLFAB) to provide independent scrutiny and advice on the development, approval, implementation, modification and maintenance of funded programmes for the designated technical matters mentioned in section 41(5).
(4) The NLFAB shall—
(a) be appointed by the Secretary of State;
(b) report to Parliament annually on the implementation of all funding of designated technical matters as specified in approved funded programmes;
(c) review all programmes on a five year cycle, including coverage of all designated technical matters specified in approved funded programmes, estimates for costs for all matters under section 41(5) and of security provided in connection with those costs;
(d) give advice on alternative arrangements where designated technical matters are not specified in an approved funded programme.’.
No. 44, in clause 59, page 47, line 30, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.

Charles Hendry: We have had an extremely constructive and helpful debate on the preceding clause, and can probably move through this group of amendments with greater speed. They relate to the matter of whom should be consulted in the section where a change or modification is being proposed. Clause 42(5) says:
“Before deciding whether to approve or reject a programme, the Secretary of State must consult each interested body about—
(a) the programme, and
(b) any modification which it is proposed to make, or any condition it is proposed to impose,
so far as it relates to a function conferred on the interested body by or under an enactment.”
Subsection (6) sets out which organisations are considered interested bodies. It mentions the Health and Safety Executive, as well as
“(b) in relation to a funded decommissioning programme for a site in England and Wales, the Environment Agency, and
(c) in relation to a funded decommissioning programme for a site in Northern Ireland, the Department of the Environment for Northern Ireland.”
Amendment No. 31 proposes that the Nuclear Decommissioning Authority and the relevant local authority be added to the list.
My understanding is that reference to the Secretary of State in the Bill does not specifically include bodies that report to him, such as the NDA, and it would therefore seem sensible to include a specific reference, although the Minister dealt in an earlier answer with the roles of the NDA in relation to these activities. It would also seem good practice for the local authority to be consulted about proposed changes. That is also the purpose of amendment No. 32, which would require the relevant local authority to be consulted before the Secretary of State approved a programme with proposed modifications or conditions.
Amendment No. 33 makes similar changes to clause 45, and would include the relevant local authority in the list of organisations invited to make written representations about a proposal to modify a decommissioning programme. I think it is important to include the local authority, as these changes could have very significant local implications, particularly, for example, to transport given the number of lorry movements if more has to be moved off-site. The local authority should be given the opportunity to highlight such impacts in a formal submission before final decisions are made.
Amendment No. 34 relates to clause 50, and would add other organisations to be consulted in this process, including CoRWM, the NDA and the relevant local authorities. These are probing amendments and some of the bodies mentioned may be included in other ways, but it seems sensible to have clarity about exactly who will be consulted and under what circumstances.

Brian Binley: I rise to support my hon. Friend on this vital issue. He spoke in an earlier debate of the way in which other countries have tried and succeeded to get local support behind a given proposal. That exercise will be vital, not only in the creation of new nuclear power stations, but in the whole decommissioning process. We all know the type of lurid stories with no foundation in fact that can easily gain credence at local level and rip through the general populace like wildfire. They do immense harm before even the process has begun. We must be aware of that kind of local feeling and the damage that it can do to a programme of this kind. I fully support such programmes.
I will make a few points about the amendments. The local population will be consulted as part of the planning process. I know that the planning decisions will be taken elsewhere, but it is right to say that those decisions require, by law, a local consultation. I am always fearful of consultations specifically about planning. Anyone who has been in local government carries that fear with them for the rest of their career. Certainly, I have been scarred on a number of occasions by such operations. I want a more balanced view to be included in the whole consultation process.
My second point is to ask, if the Minister is minded to believe that local consultation is vital in a sense wider than merely the planning process, the level at which it will take place. It seems that the regional assemblies have been knocked on the head, to use a Northamptonshire phrase, and I wonder where that leaves us with regard to local consultation.
My third point relates to the geographical areas where quangos now control the planning process. A number of areas are designated, under the sustainable communities project, in which planning decisions are taken away from the local authority. I am concerned that we should have a proper debate that covers the planning process, as I am particularly concerned that that process does not include elected representative bodies. Bearing in mind that some of the sites might be in those areas, we must have a proper ability to talk at local level, which we might not get if we are consulting only on planning matters. I ask the Minister to consider that point as part of the appeal for a wider local consultation.
My final point is about time frames. I and many others here have suffered the difficulties of the Post Office consultation, although I do not wish to draw the Minister into that debate other than to say that many people in my area felt that the consultation was not well done. In fact, they felt that it was badly done. In the case of my constituency, the announcement of closures was made at the end of December but the Christmas holiday had not been taken fully into account. As we know, we now have a two-week holiday at Christmas, but the official period is sizeably smaller. Indeed, a six-week period itself simply was not long enough.
Given that there will be some form of local consultation through the planning process, I ask the Minister to give us an idea as to whether he might consider the matter again, with a more holistic view of consultation. My constituents and many others, I am sure, will want reassurance on the matter.

Martin Horwood: I warm more and more to the hon. Member for Northampton, South. I am not sure that we agree on many things, but I agree with him absolutely on the “quangofication” of planning, where there now seems to be a regime under which Government inspectors descend from on high to deliver judgment on the future of local communities.

Hugo Swire: Will the hon. Gentleman give way?

Martin Horwood: The examination in public on the south-west regional spatial strategy is my least favourite current example.

Hugo Swire: Those are welcome words from the hon. Gentleman. Do they mean that it is Liberal Democrat official policy to do away with unelected regional assemblies?

David Amess: Order. I hope that the hon. Gentleman will not be tempted to respond.

Martin Horwood: If you will permit me to say, Mr. Amess, that I have never been in favour of unelected regional assemblies and would therefore agree with the hon. Gentleman. You are right to say, however, that we are straying from the point.
The thrust of comments from Conservative Members is that local authorities should be statutory consultees in the process and that is a laudable aim. I welcome these amendments. We seek in amendment No. 40 to add another body that is strangely absent from the Bill, namely the proposed nuclear liabilities financing assurance board. We have already explored at some length the intricacies and the debates to be had over the funded decommissioning programmes. This new board is supposed to provide, according to the White Paper, independent
“scrutiny and advice on the suitability of decommissioning programmes”
submitted by operators of new nuclear power stations. It is therefore a critical body in the whole infrastructure of financing and decommissioning programmes that this Bill seeks to create. It is a mystery to me why this important body is not included on the face of the Bill. The problem of not having it in the Bill is that it misses out on the consultation rights that are extended—we now propose to give them to local authorities as well—already to the Health and Safety Executive, to the Environment Agency and to devolved bodies. The fear is that that means that the NLFAB will only be a purely “advisory body”. That is the phrase used in the White Paper and the risk is that it will be a watchdog with no teeth.
The Minister is obviously a man of enormous integrity who has no intention of allowing the nuclear industry to be subsidised by the taxpayer. We do not know, however, who the future Energy Minister will be. Who knows who will be among his successors? Our amendment would ensure that, whoever is Energy Minister in the future, is held to the same high standards expounded by the current Minister. The NLFAB should therefore be included in the Bill in a more robust and explicit way with specific statutory rights. These would apply, for instance, before the Secretary of State decides to approve or reject a programme; before the Secretary of State can make regulations to disapply decommissioning plans or formal procedure for modification of funded decommissioning plans under particular circumstances; and before making regulations about the preparation, content and implementation of funded decommissioning programmes. This seems to us to be simply a way of joining up the Government’s current intentions. If the Minister really supports the policy that is expounded in the energy White Paper, he should have no objection to this amendment.

Malcolm Wicks: We have a number of amendments before us and my speech, following a long debate, will therefore by slightly longer than I would wish, as some important issues have been raised. I will not stray into the very clever and ambitious campaign to save Northampton sub-post offices. This is one of the most unlikely settings for that campaign and I respect the position taken by the hon. Member for Northampton, South. Nor will I talk about the south-west regional spatial strategy, although I look forward to an opportunity to discuss that.
The amendments raise important questions about the organisations and bodies that the Secretary of State should be required to consult when considering whether to approve or reject a funded decommissioning programme, a proposed modification to a programme or prior to making regulations or publishing guidance about the content of a programme. Under clause 42 of the Bill, prior to making a decision in relation to these activities, the Secretary of State is already required to consult the Health and Safety Executive, the Environment Agency in England and Wales and the Department of Environment for Northern Ireland. The purpose of that is to ensure that the decommissioning and waste-management plan that is submitted to the Secretary of State conforms with the safety and environmental requirements of the relevant regulatory body. It is also to ensure that any decision that the Secretary of State might make—for example to impose certain conditions or additional obligations or equally to issue guidance—does not adversely affect the existing regulatory structures for the nuclear industry.
To help hon. Members understand why the NDA, the Committee on Radioactive Waste Management, the nuclear liabilities financing assurance board and the relevant local authorities do not have specific responsibilities in the Bill, I thought it would be helpful to describe briefly the functions of the NDA and CoRWM, the rationale and intended remit of the NLFAB and the role that local authorities might play in taking new build forward.
As well as being responsible for decommissioning existing power stations and dealing with the issue of legacy waste, the NDA is responsible for developing and maintaining a national strategy for handling low-level waste for nuclear sites. It is also responsible for ensuring the continued provision of any required waste management and disposal facility. The NDA is also responsible for carrying out a UK-wide review of interim waste storage and will consider what may additionally be required to fulfil the Government’s commitment to ensure robust interim storage of nuclear materials until such time as the geological disposal facility is available.
The NDA’s work is relevant to new build in relation to taking forward the geological disposal facility. The NDA is providing input into the cost-modelling work that will be carried out to enable the Government to set a prudent fixed unit price for the disposal of new build waste and spent fuel in the geological facility. The NDA will also play a role in providing advice and in sharing its expertise in waste management and decommissioning with potential new build operators. This advice is likely to be important for operators when they are preparing their funded decommissioning programmes. It will be for the operators to seek this advice from the NDA. As the NDA is a non-departmental public body of which my Department has oversight, we do not believe there is a requirement for the NDA to have a specific function in the Bill.
Amendment No. 34 proposes that when the Secretary of State seeks to make regulations or publish guidance under clause 50, he should consult CoRWM, the NDA and other local authorities. Clause 50 is an important part of our framework as it enables the Secretary of State to make regulations and publish guidance about the content, modification and implementation of funded decommissioning programmes. The regulations and guidance in relation to programmes have no impact on local authorities and the scrutiny of programmes is best placed under the auspices of the NLFAB, so I believe that local authorities need not be statutory consultees.
CoRWM’s role is also outside the scope of this Bill. The role of the reconstituted committee is to provide independent advice to Government on the long-term management, including storage and disposal, of radioactive waste. CoRWM’s priority task will be to provide independent scrutiny of the Government’s proposals, plans and programmes to deliver the geological repository as the long-term management option for the UK’s higher activity waste. It does not have a role in relation to the funding of decommissioning and waste management, which is what we are talking about today primarily.
On the proposed NLFAB, in the nuclear White Paper we gave a commitment to set up an advisory body to provide independent scrutiny and advice on the suitability of the decommissioning programmes submitted by operators of new nuclear power stations. We also indicated that it would also provide advice to the Secretary of State on the regular reviews and ongoing scrutiny of funding arrangements. The board is designed to address both public and industry concerns about the scrutiny of funded decommissioning programmes.
Responses to last year’s consultation on the future of nuclear power demonstrated that there was some public concern over the ability of Government to ensure that operators of new nuclear power stations pay their full decommissioning costs and full share of waste management costs. The board is intended to alleviate this concern by publicly issuing advice on the suitability of all funded decommissioning programmes that are submitted to the Secretary of State for his approval. At the same time, representatives from both the nuclear and financial industries have expressed concern over the role of the Secretary of State and about how to ensure that he has access to the necessary expertise to assist in approving the funded decommissioning programmes.
To ensure that there is thorough, comprehensive and consistent scrutiny of programmes the board will be composed of a broad range experts, including, we expect, fund managers, financial experts, nuclear technicians and economists. As we set out in the nuclear White Paper, we expect that the Secretary of State will draw on the advice of that board before approving a programme. It is envisaged that the board will consist of high-calibre people, employed part-time, meeting periodically as and when programmes are submitted for scrutiny and for regular reviews of funds when these have been set up.
Amendment No. 40 proposes that the Secretary of State should have the power to make the board a statutory body through regulations. I am glad that hon. Members recognise the importance of the board in tabling the amendment. However, the amendment is not necessary.

Hugo Swire: Will the Secretary of State or the Minister have control of appointments to that board? What process will be used for appointing board members? What remuneration will they receive? Will there be geographic representation on the board to represent areas likely to be used for processing, decommissioning or storing nuclear waste?

Malcolm Wicks: The board will be set up according to the now well-known Nolan principles. It will not just be the Minister or someone else having their own ideas about who might be helpful; it will go through the Nolan process. I do not think that a geographical spread is necessary per se, but I will bear in mind the hon. Gentleman’s concern. Clearly, we do not want everyone coming from the same borough in London, so it might be a point that we should bear in mind, but I do not think that it will be a primary concern. The expertise that I have mentioned—nuclear expertise and an interest in funding—is the kind that we are looking for.
The form of the board is more suited to an advisory NDPB than a statutory body. I am convinced that the required advice can be provided without establishing a full regulatory body. The board will be providing advice on a small number of programmes. I do not believe that a full statutory body would offer the taxpayer the best value for money, given the amount of work that it might expect to do and the fact that it would be providing a high level of scrutiny on an ad hoc rather than a full-time basis.
All parties’ interests are in having an independent body. Operators will want to ensure that the body applies its judgment in an open and consistent way. Likewise, those concerned about new nuclear will want to ensure that the framework is best applied in a rigorous and transparent manner. It is our intention to make the reports produced by the NLFAB publicly available, so I am sure that those involved with the board will want to ensure that their advice is rigorous and independent. An example of an effective advisory NDPB in the nuclear policy field is the previously mentioned Committee on Radioactive Waste Management—CoRWM. It has proven effective in providing independent advice to the Government. The work that CoRWM has done and, no doubt, will continue to do shows that a body independent of Parliament can provide the level of scrutiny advice needed. It is that precedent that forms the basis for our proposal to create the new board.
As an advisory and not a decision-making body, I do not believe that the NLFAB should be subject to parliamentary scrutiny. The board will be advising on whether a programme is robust enough to achieve its objectives within a framework set by the Government. The framework that we are putting in place will create the parameters in which operators will have to work and it is those parameters that should be scrutinised by Parliament, together with regulations made by Parliament. It is not for Parliament to directly scrutinise that way in which operators implement their programmes within the framework. After all, they are private companies. Such scrutiny is the responsibility of the Secretary of State assisted by the relevant parties. The board will advise on the exercise of functions by the Government, in particular the Secretary of State’s decision whether to approve a programme, not on the exercise of functions by Parliament.
As for the input that local councils should have in the matter that I set out earlier, it is important to understand the role that they have played in the past in the development of nuclear power stations and the role that the Government envisage local councils playing in the development of new nuclear. In the past, the planning process for nuclear power stations and other large-scale energy projects has been inefficient, costly and lengthy. In some cases, it may not have provided sufficient opportunity for the consideration of local issues because the process has focused largely on dealing with broader national issues, for example.
The Planning Bill proposes a new consent regime for nationally significant infrastructure projects and the Government will produce national policy statements that establish the national case for infrastructure development and set the policy framework to be used by the new infrastructure planning commission. National policy statements will be subject to public consultation and the Planning Bill sets out the procedures for producing them. Decisions on applications will be made by the IPC, which will manage inquiries and take decisions on applications for nationally significant infrastructure projects, including proposed nuclear power stations. The relevant local authorities will have an opportunity to comment on specific matters relating to the proposal to build a nuclear power station.
The new IPC process will focus on specific local aspects of the application rather than the national need for the proposal. That will include discussion and consideration of the impact that a power station might have on the local community. It is only right that once a new nuclear power station is proposed, local authorities should have a say in its development. We believe that it is during the planning process that local authorities should have a formal role, not during the consideration of a funded decommissioning process.

Charles Hendry: The clause does not relate to the process for approving nuclear power stations, but proposes the decommissioning package. The amendment on local authority involvement relates to approving a programme with modifications or conditions. Is the Minister saying that a local authority could simply discover that the Secretary of State had announced modifications or conditions without consulting it or letting it have any input?
It could be decided, for example, that rather than storing a mound of spoil on site, it will be removed and disposed of elsewhere. In such circumstances, there will be significant pressures on the local infrastructure. Surely the local authority would be consulted. That is why we are suggesting that the local authority should be a statutory consultee on modifications and changes.

Malcolm Wicks: Let me continue and see if I can satisfy the hon. Gentleman. I believe that it would be wrong for local authorities to comment on the contents of funded decommissioning programmes. Local authorities will quite rightly be concerned with the safe operation of the power station, but the detailed financial considerations that these clauses cover is quite a different matter.
I am aware that the operators of existing nuclear power stations go to great lengths to engage with local authorities and communities on matters that affect them. While I cannot speak for the future, I imagine that new operators will continue that process and engage local authorities on local issues concerning new nuclear power stations. Nevertheless, I will reflect on what the hon. Member for Wealden has said to ensure—not meaning it rudely—that there is not a substantive issue that I need to address. I will take further advice on this issue.

Anne Main: I am intrigued by the Minister’s statement about nuclear operators liaising with communities and local authorities. Given the ongoing legacy that some of these depositories may create for a community, what are the Minister’s views on education and ongoing engagement with such communities? He felt reassured, having seen a depository in operation. How is education for the local communities that are expected to take these depositories factored into the equation?

Malcolm Wicks: On visiting one or two nuclear installations in the UK and the one that I have mentioned in Finland, I have been impressed with the links to local schools and communities. Nuclear power stations seem to have very good connections with local communities. That should hardly be a surprise, because they are often a major employer in the community and have large, skilled work forces that may include members of the local council. I have heard a great deal about outreach in education; enabling school children to come in and so on. I have no reason to believe that that will not continue. It is in the interests of those companies to enable children and their parents to learn more about new nuclear—they will provide part of a future work force. I have been impressed by what I have seen already. I am sure that that will continue.

Brian Binley: I thank the Minister for his generosity. He has been immensely kind. May I delve more deeply into the issue of quango planning authorities, which are gaining some precedence throughout the nation, particularly in my part of the world? They report to a regional body, which is chaired by a Minister. They are seen as part of the machinery of government. There is some concern about the impression that the Government do not want local involvement. It is eminently sensible for the Government to be seen to be wanting local involvement and for the local voice to be heard properly and fully. Will the Minister comment particularly on the question of those supra-local planning authorities, which have been set up recently and the credibility of which seems to have been growing in government circles?

Malcolm Wicks: I will not venture too far down that path, because I could trespass into other territory, which our vigilant Chairman might well rule out of order.
To reiterate, when there is a proposal for a power station, which will now come under the auspices of the new IPC, it is right and proper that local people, groups and authorities have the opportunity to comment on local issues. That will continue to happen. It is generally appropriate for the power station to have good links with the local community, which was the burden of the question of the hon. Member for St. Albans. The point that I am still puzzling about is that made by the shadow Minister, which he may want to come back on, so that I get it fully. If, as part of a change to the decommissioning plan, something might legitimately affect the local community—I am not sure what that might be—should the local authority have any involvement? I would like to tease the issue out a bit more with the hon. Gentleman.

Charles Hendry: I am not sure whether this is an intervention or a speech, nor how long I am allowed to speak. My concern was that the Minister put the emphasis on “funded” decommissioning programme. It is not so much the financing of that package, which I totally understand is not a matter for the local authority, but any change or modification to the decommissioning programme itself. In some circumstances, that would not have an impact beyond the site where it was happening, but in some cases it is possible that there would be an impact on a local community. I particularly mentioned the transport infrastructure. A modification may involve a great deal of movement of material off site or other changes of that nature. Clearly, on some occasions it would be appropriate to involve the local authority in the process. Local authorities ought to have the right to be involved as a statutory consultee, rather than simply discovering that a modification has been put through by the Secretary of State, on which it had no chance to comment.

Malcolm Wicks: That is a perfectly reasonable question—I do not always follow my lines to take. I would like, with the approval of the hon. Gentleman and the Committee, to take some time outside the Committee to reflect and to see whether there is a substantive issue here that we need to address.

Charles Hendry: I am grateful for the Minister’s reasonable and thoughtful approach. Clearly, it is not appropriate to include the references to the NDA, as we did in the amendment. Also, I understand why CoRWM would be dealt with separately. I am grateful for his offer to reflect further on the subject and happy to have further conversations about it. We might return to the issue on Report. In the light of those assurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

David Amess: The debate has obviously been wide-ranging, so there will not be a separate stand part debate.

Martin Horwood: On a point of order, Mr. Amess, I would like the opportunity to move amendment No. 40, which is in the group, if that is possible.

David Amess: That is perfectly in order. I wondered whether the hon. Gentleman wanted a Division on amendment No. 40. We are now coming to amendment No. 45. The hon. Gentleman can move amendment No. 40, but at a later stage.

Martin Horwood: On a point of order, Mr. Amess, I understand totally why you do not want to have a clause stand part debate, but I have a couple of questions that would help us to understand the detail of the clause, so is it appropriate to ask them?

David Amess: The hon. Gentleman is entirely right, and I suppose that I should have made it clearer. We are now going to debate amendment No. 45, and it will be entirely appropriate for him, and perhaps others, to raise points in the debate.

Martin Horwood: I beg to move amendment No. 45, in clause 42, page 38, line 21, at end add—
‘(11) The Secretary of State must not approve a funded decommissioning programme if it includes any proposal to limit the liabilities of the operator, or a body corporate associated with the person who submitted the programme, should cost estimates change.’.
I am not sure whether this ought to be a point of order, but I hope to reply to some of the points that were made in the debate on the group including amendment No. 40. I was grateful for the Minister’s welcome for amendment No. 31, which was tabled by the Conservatives, and the associated amendments, and I welcome his agreement to reflect on those. I was much less reassured by his comments on our amendments, and we will therefore press them to a vote when the moment arises.
Amendment No. 45 was initially something of a probing amendment to explore the impact of the long-term variability of the costs of decommissioning programmes and the impact that that would have on the original base case calculations. We have explored that issue on a number of occasions, so I shall keep my comments on the amendment relatively brief. The focus is on the challenge of accurately forecasting the costs of decommissioning and how we adjust what starts as the base case to take account of variable costs. The Minister mentioned Finland as an example of an attempt to calculate those, but the Finnish example is a good one because the costs are overrunning spectacularly, as is the time scale. Hon. Members have pointed out the technical difficulties of looking at the costs of what might be a dying industry if no other Governments join us in the rush towards new nuclear. In the White Paper, the Government said that they planned
“to use the exercise on waste cost modelling to set a fixed price or upper limit for nuclear operators. This price would be set at a high level, including a material risk premium over and above expected costs.”
The Minister has already referred to the risk premium mechanism, so the amendment simply seeks to join up different parts of the Bill and make it absolutely clear that the Secretary of State would not approve a funded decommissioning programme if it included any proposal to limit the liabilities of the operator or a body corporate associated with the person who submitted the programme should cost estimates change. If that is the Minster’s intent, as he has repeatedly suggested in our discussions, I once again see no reason why the Government should object to the amendment.

Charles Hendry: The hon. Gentleman has raised some interesting points, and I look forward to the Minister’s clarification. I wonder whether the Minister might also take account of a couple of more general issues. Subsection (8) states that the Secretary of State cannot
“reject a programme without informing the site operator of the reasons for doing so.”
How will that be done—by means of a meeting or a letter? What will the process be? Specifically, will it be made public and will there be a right of appeal against that decision?
Clause 42(9) says that the Secretary of State must act “without unreasonable delay”. That is vague terminology. We could be looking at a nuclear programme that goes back 15 years. Is there a legal definition of “unreasonable delay”? Greater clarity is required.

Malcolm Wicks: I thank the hon. Member for Cheltenham for moving the amendment and I thank the hon. Member for Wealden for asking two questions. I will try to reply without unreasonable delay, but I will not define what I mean by that at this precise moment.
It is helpful to discuss the amendment in the context of the clause. To clarify, clause 42 allows the Secretary of State to approve, approve with conditions or modifications, or reject a funded decommissioning programme. In approving the programme either with or without modifications, unconditionally or subject to conditions, the Secretary of State is required to ensure that prudent provision is made for technical matters and for the financing of designated technical matters that are set out in the programme. In determining whether to approve the programme, the Secretary of State would have regard to the factors set out in guidance published under clause 50(6). That guidance will help operators to understand more fully what issues the Government expect to be covered in a funded decommissioning programme if it is to be approved.
Before approving a programme, the Secretary of State is required to consult with the Health and Safety Executive, the Environment Agency in England and Wales, and the Department of the Environment for Northern Ireland. Those are known as interested bodies and, if I may, I will refer to them in that way for the purpose of the debate. The purpose of consulting with the interested bodies is to ensure that the technical plans submitted to the Secretary of State conform to the safety and environmental requirements of the relevant regulatory body. The Secretary of State can, if necessary, require a modification to a programme that has been submitted for approval, or impose a condition on it. The clause requires that, before imposing that modification or condition, the Secretary of State give any person who would be subject to the proposed modification or condition an opportunity to make written representations about it. That will give those persons affected the opportunity to comment on the proposal and, where necessary, put their case as to why the proposed modification or condition should or should not be made.
Although the Bill does not require it, the Secretary of State would consider any written representation received. By placing the Secretary of State under a duty to allow operators and others to make written representations, it is implicit that the Secretary of State should have regard to representations made when taking his decision. The Secretary of State cannot reject a programme without informing the site operator of the reasons for doing so. To reduce uncertainty, the Secretary of State must make a decision whether to approve a programme “without unreasonable delay”. We might come on to that point.

Anne Main: The Minister mentions representations from interested parties with regard to accepting a proposal. Does he allow negative representations or only those that are in support of a proposal?

Malcolm Wicks: I shall return to that important question in due course, if I may.
The amendment seeks to prevent the Secretary of State from approving a plan which limits an operator’s liability under a funded decommissioning programme, in the case of rises in cost estimates. I will set out our overall policy approach on those issues, and on the basis of that I will go on to explain why the proposed amendment is unnecessary and would not be compatible with our overall approach.
We have made it clear that it is our policy that owners and operators of new nuclear power stations must cover the full costs of decommissioning and their full share of waste management and disposal costs. In the draft guidance on funded decommissioning programmes, we state that operators will be expected to reassess periodically their estimates of costs, and ensure that any increases are factored into an increase in the target amount of moneys that they will accumulate in their fund. Operators’ estimates of costs will be subject to scrutiny from a number of sources, including from those responsible for the independent fund and from the new independent advisory board, the NLFAB. The operator will be responsible for making good any shortfall or risk of shortfall in the accumulated funds held by the fund identified by the various elements of scrutiny.
In the nuclear White Paper we set out our intention to set a fixed unit price to operators for the disposal of intermediate-level waste and spent fuel. The fixed unit price will give operators certainty on their costs to enable them to take investment decisions and to seek financing. But we will not set this price at the expense of the taxpayer. It is worth emphasising that the fixed unit price relates only to the disposal of intermediate-level waste and spent fuel. I sought to clarify that point earlier. It does not relate to the costs of decommissioning or other waste management costs such as the management and disposal of low-level waste.
It is right and proper that the Government should bear the risk of building a geological disposal facility, as we would need to do this to dispose of our legacy of waste, regardless of the position on new build. As it is both desirable and technically possible to dispose of new-build waste in the same facility as legacy waste, new-build operators will have no influence over the project to deliver the geological disposal facility. It is therefore right that they should not bear open-ended risks in the event that there are cost overruns on the project.

Steve Webb: I just want to get a feel for scale. One of my problems with the Bill is that, although I understand the concept of a risk premium and a cost, as an economist I like to know how many zeros there are on the end of any number. So may I ask the Minister one of my “how many zeros” questions? In a typical new nuclear plant, how many noughts would there be in the typical costs that came under the scope of one of these funded decommissioning plans? Would the risk premium be double? Would there be a 100 or a 10 per cent. margin? What scale are we talking about?

Malcolm Wicks: There are quite a few noughts, but I shall be even more specific as we progress. How specific we shall have to wait and see. It cannot be a definitive number.
It is equally right and proper that operators should pay for the certainty that they will get over the costs of the disposal of their intermediate-level waste and spent fuel. The fixed unit price will be set at a level over and above expected costs and will include a significant risk premium. I think that that is what prompted the hon. Gentleman’s question. The fixed unit price that the Government will set for operators of new nuclear power stations for disposing of their intermediate-level waste and spent fuel will be based on an estimate of the costs of disposing of these materials in a geological disposal facility. It will be fixed at the outset and will not be subject to change, although it will be escalated over time, in line with predetermined factors such as inflation.
The fixed unit price will include the following items: estimates of the cost of disposing of intermediate-level waste in a geological disposal facility, including a contribution to the fixed costs of the facility; estimates of the costs of disposing of spent fuel in a geological disposal facility, including a contribution to the fixed cost of the facility. There is a danger that the hon. Gentleman might simply have thought that I was repeating myself when in fact I wanted to emphasise to a sceptical Liberal Bench both the importance of our policy and the importance of proof-reading. The significant risk premium will cover the risk that the eventual costs of building a geological disposal facility to dispose of intermediate-level waste and spent fuel are higher than estimated and the risk that geological disposal facilities are not available when required by the agreed schedule for the Government to take title to and liability for the waste.
We are developing a methodology for establishing a fixed unit price. We will test this methodology with the financial industry to ensure that we make use of the best available expertise on how to price risk properly. We have begun work to update our estimates of the cost of decommissioning and waste management for new nuclear power stations and more information on these issues is set out in the consultation published on 22 February. This, along with the NDA’s exercise to estimate the costs of geological disposal, will be key in determining the appropriate level for the fixed unit price. Our cost estimates are being built using the best available information and data and, more importantly, tested by external experts. Therefore, I cannot be as precise as the hon. Gentleman was tempting me to be. I will see if I can be helpful later.
I do not believe that the amendment is either necessary or compatible with the approach that I briefly described, and I will therefore ask the hon. Gentleman to consider withdrawing it. Before I sit down, however, I will try to be helpful about the concept of “unreasonable delay”, which he felt to be vague.
We do not consider the term vague. It also applies in relation to decommissioning of offshore oil and gas installations and offshore renewable installations. It is not defined in the legislation or in any other legislation. That may not seem to the hon. Gentleman to be the most powerful argument that I have put to him today. However, I am not aware that the lack of definition has caused any difficulty in the context of the other legislation. That is the clincher. I will try to come back to the hon. Gentleman to see whether, in comparison—

Charles Hendry: Will the hon. Gentleman give way?

Malcolm Wicks: I am in the middle of a very strong argument here, so I am delighted to give way.

Charles Hendry: I thought a modest intervention might give the Minister a chance to gather some even more useful arguments explaining why this is not the right way forward. The hon. Member for Northavon has said that he is an economist, and likes a bit of clarity with his noughts. Perhaps the Minister could give us an idea of whether we are talking about two weeks, 10 weeks, a year or two years. It has not yet been tested through the courts, so there is no legal definition, but the Government must have in their own minds a definition of “unreasonable delay”.

Malcolm Wicks: I will try to be helpful, albeit after a little delay, and perhaps not this morning. It is a perfectly reasonable question, and the hon. Gentleman is a reasonable man who will realise that, despite the comparisons with oil, gas and renewables, this is uncharted territory. He is entitled to a more specific answer, which I will work on during the lunch hour. I have dealt as best I can with issues relating to the fixed price for waste disposal costs. If I can add more this afternoon, I will do so.
The hon. Member for St. Albans—Verulamium—asked whether representations could include negative representations. The answer is yes. Occasionally, I can be very clear in my answers, and am delighted to be able to do so. The hon. Member for Wealden asked how the Secretary of State would tell an operator that he would not approve a plan. It will be through discussions with the operator and then, formally, in writing. The Secretary of State will set out reasons. He will make decisions based on advice from our new advisory board. No formal appeal from the operator will be allowed, but the operator can of course resubmit the programme. I hope that that will be considered reasonable.
As for the cost of decommissioning a new nuclear power station, we set out in the consultation document an estimate of £600 million. Waste disposal costs were estimated to be £300 million. However, we have been working to update estimates of the costs of waste management and decommissioning. In the consultation on funded decommissioning programme guidance, we published the cost modelling methodology that we have developed, and we envisage being able to publish revised estimates towards the end of 2008 or in the first quarter of 2009. That is rather more precision about the noughts than I thought at one stage I would be able to give to the hon. Member for Northavon.
There are one or two issues that I have not been able to cover, but I hope to catch your eye, Mr. Amess, and deal with them in due course.

Martin Horwood: I am afraid we have found that, as with amendment No. 40 and the associated amendments, we have a rather frustrating situation with regard to amendment No. 45. That amendment seems to us to be in line with Government policy, if Government policy really means what it says. It seeks to add absolute transparency to the Bill, to ensure that it is clear that the taxpayer will never again be liable for the kind of cost miscalculations and spiralling subsidies that characterised the first generation of nuclear power stations.
Amendment No. 45 seeks to address the crux of that argument by making it absolutely clear that the Secretary of State should not approve a funded decommissioning programme if it in any way limits its liabilities. We have discussed the issues, how difficult it is to calculate the costs, the Paris convention and so on, and yet the Government will not include this fundamental rule in the Bill, even though they seem to aspire to it in principle.
I am afraid that, on this occasion, as with amendment No. 40, I will be pressing amendment No. 45 to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 2, Noes 13.

Question accordingly negatived.

Clause 42 ordered to stand part of the Bill.

David Amess: I said first the “Ayes have it”, but it was a Freudian slip.

Malcolm Wicks: That was almost the Liberals’ finest moment for 100 years.
Clause 43

Prohibition on use of site in absence of approved programme

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: We can possibly now make some faster progress, having had a number of useful debates. Clause 43 will ensure that any person operating a new nuclear power station without an approved funded decommissioning programme in place or allowing another person to do so will be committing a criminal offence. The penalty for such an offence will be a fine not exceeding the statutory maximum—currently £5000—in the magistrates court, or up to two years’ imprisonment or an unlimited fine in the Crown court.
The purpose of creating this criminal sanction is to ensure that robust and prudent programmes are in place before operators start building or operating new nuclear power stations. Putting in place approved programmes at this stage should ensure that the operator takes full responsibility—meeting the costs of decommissioning and waste management—and that the prospect of recourse to public funds is remote at all times. This is the fundamental objective of our policy. The penalties for committing this offence mirror those contained in section 40 of the Petroleum Act 1998, which governs the failure to submit an abandonment programme for the decommissioning of oil and gas installations. The same penalties are also contained in section 113 of the Energy Act 2004, which governs off-shore renewable decommissioning programmes. It should be noted that the provisions will complement existing legislation and conditions that apply to existing nuclear power stations. Section 1 of the Nuclear Installations Act 1965, which sets out offences and penalties for contravening requirements in relation to the use of a site, and the Health and Safety Executive’s nuclear site licence conditions will apply to new nuclear power stations just as they do to existing ones.

Question put and agreed to.

Clause 43 ordered to stand part of the Bill.

Clause 44

Modification of approved programme

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: Before I start on the clause, I would like to mention to the Committee that clauses 44, 45, 46 and 47 all deal with the subject of modifications to an approved programme. Hon. Members may find it useful to keep all four clauses in mind when we discuss them individually. Clause 44 sets out who can propose a modification and what the proposal can consist of, while clause 45 sets out the procedure for modifying an approved programme. Clause 46 is slightly different as it allows the Secretary of State to set out in regulations how the procedure described in clause 45 can be disapplied. Clause 47 sets out when that modification takes effect.
Clause 44 gives certain persons the ability to propose amendments to an approved, funded decommissioning programme. That could include both financial and technical modifications. Those who can propose modifications are the Secretary of State, the site operator, and any other person who has obligations under the programme, providing that the site operator consents to the proposed modification. The aim of the power is to allow for the modification of a programme once it has been approved. The operator would be expected to proposed modifications where a change in the station had a significant impact on decommissioning or waste cost estimates. Modifications may also need to be made where there has been a breach in the programme. Operators and the Secretary of State will be free to propose modifications at any time, but persons with obligations under the programme will be able to submit a modification only with the approval of the operator. That is because the operator is ultimately responsible for the content and implementation of the programme.
As well as making modifications to the programme, the clause allows the Secretary of State to impose new or additional obligations on any body corporate associated with the operator. That might be necessary where the level of security that a body corporate can provide has diminished in some way, and there is a requirement for another body corporate associated with the operator to provide that additional security. The Secretary of State’s power to make modifications or impose obligations is integral to the enforcement and sanction regime. For example, in the event of a breach in the programme, the Secretary of State might choose to modify the programme by imposing an obligation on the operator to put in place a procedure to ensure that the breach did not occur again before, or instead of, taking formal enforcement action.
Similar powers in relation to the modification of a decommissioning programme exist elsewhere. The Petroleum Act 1998 gives the Secretary of State the power to revise a programme to decommission offshore oil and gas installations. The provisions of the Energy Act 2004 give the Secretary of State a similar power in relation to the decommissioning of offshore renewable installations. The power to modify an approved programme is key if the programme is to remain up to date, and to ensure that the cost estimates, technical plan and financial arrangements remain prudent.

Charles Hendry: There are a number of concerns to express and points to make in relation to the clauses. It might be sensible to outline them at this stage, although I will probably get in only three sentences before the Minister goes for his lunch break. My concern is about the extensive powers that the Secretary of State seems to have. Businesses will be building new reactors based on an understanding of the costs involved in planning, building, running and decommissioning those power stations, and of getting rid of the waste. It is clear that they are looking for considerable certainty about the exposure to risks and to any additional costs. The clause seems to give the Secretary of State the right unilaterally to tear up an agreement and impose much tougher conditions. Businesses appear powerless to stop this, and as the Minister said in an earlier discussion, they do not have a right of appeal.

It being One o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.